Koehler v. The Packer Group, Inc. , 2016 IL App (1st) 142767 ( 2016 )

2016 IL App (1st) 142767
FIRST DIVISION
March 28, 2016
No. 1-14-2767
MICHAEL G. KOEHLER, Ph.D, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee and Cross-Appellant, ) Cook County,
)
v. )
) No. 11 L 2147
THE PACKER GROUP, INC.; PACKER )
ENGINEERING, INC.; KENNETH PACKER; )
WARREN DENNISTON; and CHARLOTTE SARTAIN, ) Honorable
) Raymond W. Mitchell
) and Thomas J. Lipscomb,
Defendants-Appellants and Cross-Appellees. ) Judges Presiding.
PRESIDING JUSTICE LIU delivered the judgment of the court, with opinion.
Justice Connors and Justice Harris concurred in the judgment and opinion.
OPINION
¶1 Pursuant to an employment agreement with The Packer Group, plaintiff Dr. Michael
Koehler was employed as chief executive officer of its wholly owned subsidiary, Packer
Engineering. Plaintiff alleged that he was first demoted and then discharged from this position
after revealing to the company's board that its founder and chairman, Dr. Kenneth Packer, had
engaged in financial improprieties. Plaintiff sued Packer Engineering and The Packer Group for
breach of contract. He also sued Dr. Packer; Charlotte Sartain, board secretary and vice president
of finance for The Packer Group; and longstanding board member Warren Denniston for tortious
interference with contract, claiming they each induced The Packer Group to breach its agreement
with him. After a three-week trial, the jury returned a verdict for plaintiff.
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¶2 On appeal, defendants contend that plaintiff's claims against them should have been
resolved by binding arbitration and that the circuit court erred in granting plaintiff leave to file a
late jury demand absent a showing of good cause. Beyond this, they claim no error with respect
to the jury's verdict in plaintiff's favor on the breach of contract claim against Packer Engineering
and The Packer Group (the corporate defendants). With respect to the tortious interference claim
against Dr. Packer and Ms. Sartain (the individual defendants), 1 defendants raise additional
claims of error, arguing that: (1) they were entitled to judgment as a matter of law, (2) the circuit
court improperly instructed the jury, (3) the jury's verdict was against the manifest weight of the
evidence, (4) the award of compensatory damages was improper in several respects, (5) punitive
damages were not warranted, and (6) the amount of punitive damages awarded was excessive.
¶3 On cross-appeal, plaintiff additionally argues the circuit court improperly limited his
damages for breach of contract to severance pay, improperly admitted evidence of his post-
termination earnings, and failed to award him the full amount of costs he requested as a
prevailing party. For the reasons that follow, we affirm the judgment of the circuit court.
¶4 BACKGROUND
¶5 In his initial complaint against the corporate defendants, plaintiff alleged that, on October
22, 2008, The Packer Group offered him the position of chief executive officer of Packer
Engineering for an initial term of four years, after which point his employment would
automatically become "at-will." The employment agreement was memorialized in a letter signed
by plaintiff, Dr. Packer as chairman of the board, and Ms. Sartain as executive vice president of
finance. The employment agreement established the term of plaintiff's employment, his duties,
and his compensation, providing as follows:
1
Mr. Denniston is not a party to this appeal.
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"Term of Agreement
The term of your employment under this Agreement will be for a period of
four (4) years, beginning on the date of employment with the Company, which
will begin on December 1, 2008. Following this initial term of employment,
unless otherwise mutually agreed upon, employment will revert to 'at will' and
subject to the terms of similarly situated employees of the Company at that time,
except under the provisions of the section entitled 'Severance Pay Arrangement.'
***
Severance Pay Arrangement
In the event your employment is terminated by the Company without
'cause,' or by you as a result of 'constructive cause,' or due to a 'change of control'
of the Company, you will be entitled to a severance payment of one (1) year of
salary and benefits, plus the targeted incentive compensation for that year of
employment. This severance amount will be paid out during the course of one (1)
year from the date of termination."
¶6 The agreement also contained the following arbitration clause:
"Dispute Resolution
Any material breach, dispute, or claim resulting from this Agreement shall
be settled by binding arbitration in accordance with the laws of the State of
Illinois. Both you and the Company agree to waive their respective rights to
dispute resolution in a court of law. The costs associated with arbitration will be
paid by the party(ies) as designated by the arbitrator."
¶7 Plaintiff further alleged that, as CEO of Packer Engineering and, beginning in June 2009,
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as a member of the board of directors, he reviewed financial records of The Packer Group and
learned that Dr. Packer was, without board authorization, diverting money from The Packer
Group to New Vermillion Iron Works, an independent company purchased by Dr. Packer.
Plaintiff investigated, became aware of "potentially illegal financial activities" between The
Packer Group and New Vermillion, and disclosed these improprieties to senior leadership and
select members of the board of directors in or around September 2009. Plaintiff further alleged
that, when he refused to participate in or turn a blind eye to the improprieties, Dr. Packer forbid
him from reviewing The Packer Group's financials or attending board meetings.
¶8 According to plaintiff, Dr. Packer refused to cooperate with a special committee
appointed in the spring of 2010 to investigate the situation. Plaintiff alleged that Dr. Packer
formed a new management committee to run The Packer Group and Packer Engineering called
the Chief Executive Officer Counsel (CEOC) and that, in retaliation for his attempts to fulfill his
duties as CEO and disclose Dr. Packer's conduct, he received a letter from the CEOC on May 7,
2010 purporting to demote him. Plaintiff alleged that, shortly thereafter, he was presented with
an ultimatum: accept the demotion or be terminated. He chose the latter and sued. In his
complaint, plaintiff sought the full amount of his unpaid annual salary and benefits for the two-
and-a-half years remaining on his agreement, one year of severance pay, the value of his stock,
amounts due to him under the company's incentive compensation plan, and punitive damages.
¶9 The corporate defendants filed an answer largely denying these allegations and asserting
plaintiff's own breach of the material terms of the employment agreement as an affirmative
defense. The circuit court granted plaintiff's motion to strike the affirmative defense as
conclusory and set a deadline for defendants to file any amended affirmative defenses. Discovery
commenced throughout the summer and fall of 2011. Defendants responded to plaintiff's written
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discovery requests and produced documents—serving an Illinois Supreme Court Rule 214(c)
(eff. Jan. 1, 1996) affidavit of completeness—but did not propound their own discovery.
¶ 10 On September 29, 2011, the corporate defendants moved to dismiss plaintiff's complaint
pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010)),
arguing that the arbitration provision in plaintiff's employment agreement deprived the circuit
court of subject matter jurisdiction and required that all disputes arising under the agreement be
submitted to arbitration. In response, plaintiff argued that the corporate defendants had waived
their right to arbitrate and that he would suffer prejudice if arbitration was compelled so late in
the litigation. The circuit court denied the motion, concluding that the actions taken by the
corporate defendants from the inception of the lawsuit were inconsistent with a right to arbitrate.
Specifically, the circuit court determined that "the weight of authority in Illinois and in other
jurisdictions supports the proposition that answering a complaint without asserting the
contractual right to arbitrate results in a waiver of that right."
¶ 11 Plaintiff subsequently filed an amended complaint adding a claim for tortious
interference with contract against the individual defendants. Defendants again sought to enforce
the arbitration clause. The individual defendants contended both that the tortious interference
claim against them fell within the scope of the agreement because it "result[ed] from" plaintiff's
employment, and that—although they did not sign the agreement in their individual capacities—
they could enforce the arbitration clause as agents of the corporate defendants. Defendants
alternatively urged the court, pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS
5/2-615 (West 2010)), to find that plaintiff failed to state a claim upon which relief could be
granted.
¶ 12 The circuit court dismissed the new tortious interference claim with prejudice, noting that
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plaintiff had failed to state what each of the individual defendants did to induce a breach of the
employment agreement. The circuit court denied defendants' motion to dismiss for lack of
subject matter jurisdiction "for the reasons stated in [its] Order of November 9, 2011," i.e., the
order denying the corporate defendants motion to dismiss and finding those defendants waived
their right to arbitrate. Because it dismissed the new tortious interference claim pursuant to
section 2-615, the court noted: "there is nothing at issue presently that was not before the court
when it previously denied Defendants' argument that the case was subject to mandatory
arbitration."
¶ 13 Plaintiff was ultimately allowed to file a second amended complaint and, this time, the
circuit court found his allegations were sufficient to state a claim for tortious interference with
contract. Although the claim against the individual defendants was thus reinstated, defendants
did not ask the court at that time to reconsider its arbitration ruling with respect to those
defendants. Instead, defendants filed an answer asserting several affirmative defenses. They did
not assert the arbitration clause as an affirmative defense but this time did deny plaintiff's
allegations that jurisdiction and venue were proper in the trial court. The parties proceeded with
discovery and a jury trial was scheduled.
¶ 14 Before trial, the individual defendants raised the arbitration clause again in their motions
for summary judgment. The circuit court denied the motions, agreeing with plaintiff that: (1) the
tortious interference claim did not "result from" the agreement; (2) the individual defendants
were not parties to the agreement capable of enforcing its terms; and (3) they had waived their
right to compel arbitration by failing to invoke the arbitration clause in their motions to dismiss,
answering the complaint and asserting affirmative defenses, participating in discovery, and
waiting too long to raise the issue.
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¶ 15 A three-week jury trial commenced on May 6, 2014, during which the parties presented
significant evidence in support of their respective versions of the events leading up to the
termination of plaintiff's employment. Plaintiff argued that he was demoted and then terminated
after revealing Dr. Packer's financial improprieties to the company's board, and that Dr. Packer,
Ms. Sartain, and Mr. Denniston acted to cover up the wrongdoing, prevent plaintiff from
performing his duties as CEO, and punish him for interfering in their running of the company.
Defendants denied any wrongdoing, argued that plaintiff performed poorly as a CEO, and that he
was offered but refused another position within the company.
¶ 16 In addition to his own extensive testimony, plaintiff presented the testimony of Alan
Wilks, the employee who first contacted him about the CEO position at Packer Engineering;
Deborah Hockman, a board member assigned to "coach" plaintiff in his duties as CEO in
November 2009; Edward Caulfield, president and former vice president of Packer Engineering;
Christine Tomczak, a former assistant to Charlotte Sartain; Richard Thompson, a certified public
accountant; William Wortel and Bruce Duffield, Packer Engineering's outside counsel; board
member Russell Johnson; and defendants Warren Denniston and Charlotte Sartain. Defendants
additionally presented the testimony of Dr. Packer and Christopher Schemel, a Packer
Engineering employee who was critical of plaintiff's performance as CEO. Together, the parties
submitted over 140 exhibits at trial.
¶ 17 The jury reached a verdict in plaintiff's favor on both counts and judgment was entered
on the jury's verdict on June 5, 2014. For his breach of contract claim against the corporate
defendants, the jury awarded plaintiff damages in the amount of $100,000. For his tortious
interference with contract claim against the individual defendants, the jury awarded plaintiff
$720,000 in compensatory damages and $1.2 million in punitive damages from Dr. Packer, and
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$205,000 in compensatory damages and $150,000 in punitive damages from Ms. Sartain.
Defendants' post-trial motion was denied by the circuit court on August 28, 2014, and they
timely filed their notice of appeal on September 5, 2014. Jurisdiction is proper pursuant to
Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments entered
below. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).
¶ 18 ANALYSIS
¶ 19 A. Arbitration Provision
¶ 20 On appeal, defendants contend the circuit court erroneously denied their request to
arbitrate the claims raised in this case. Plaintiff concedes that his breach of contract claim against
the corporate defendants falls within the scope of the arbitration provision, but argues that his
claim against the individual defendants for tortious interference with contract did not "result
from" the employment agreement. Plaintiff further argues that all defendants waived their right
to arbitrate by "participating in this litigation and submitting and responding to substantive issues
before the [c]ourt prior to seeking arbitration," i.e., by filing an answer, asserting an affirmative
defense, and responding to written discovery. Defendants maintain, however, that their "[l]imited
legal maneuvering" and "participat[ion] in the judicial forum" do not demonstrate an
abandonment of their right to compel arbitration, that the individual defendants are entitled to
invoke the arbitration provision as agents of the corporate defendants or as third-party
beneficiaries, and that the tortious interference claim against the individual defendants is within
the scope of the arbitration provision. We address these issues in turn, considering the rights of
the corporate defendants and the individual defendants separately.
¶ 21 1. Waiver by the Corporate Defendants
¶ 22 When reviewing a circuit court's ruling on whether a party has waived its right to
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arbitrate, we review findings of fact for an abuse of discretion and questions of law de novo.
Bovay v. Sears, Roebuck & Co., 2013 IL App (1st) 120789, ¶¶ 24-26. Arbitration is a favored
method of settling disputes in Illinois. Schroeder Murchie Laya Associates, Ltd. v. 1000 West
Lofts, LLC, 319 Ill. App. 3d 1089, 1095 (2001). Indeed, "public policy concerns *** favor[ing]
arbitration outweigh concerns regarding judicial economy, duplication of effort, or possibly
inconsistent results." Id. at 1096 (citing Board of Managers of the Courtyards at the Woodlands
Condominium Ass'n v. IKO Chicago, Inc., 183 Ill. 2d 66, 76-77 (1998)). Although disfavored,
waiver will be found where "a party conducts itself in a manner inconsistent with the arbitration
clause, thereby demonstrating an abandonment of that right." Northeast Illinois Regional
Commuter R.R. Corp. v. Chicago Union Station Co., 358 Ill. App. 3d 985, 996 (2005). "The
existence of a waiver is determined by the types of issues submitted, not by the number of papers
filed with the court," (Kostakos v. KSN Joint Venture No. 1, 142 Ill. App. 3d 533, 536-37
(1986)), with the "crucial inquiry" being "whether the party has acted inconsistently with its right
to arbitrate" (internal quotation marks omitted) (Glazer's Distributors of Illinois, Inc. v. NWS-
Illinois, LLC, 376 Ill. App. 3d 411, 425 (2007)). "A party acts inconsistently with its right to
arbitrate when it submits arbitrable issues to a court for decision." TSP-Hope, Inc. v. Home
Innovators of Illinois, LLC, 382 Ill. App. 3d 1171, 1174 (2008).
¶ 23 At the outset, plaintiff finds it "significant" that defendants chose not to seek
interlocutory review, pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Feb. 26, 2010), of
the circuit court's orders denying arbitration, arguing that it is "disingenuous" for them to press
their right to arbitrate now, after over four years of litigation has passed. The language of Rule
307(a), however, is unambiguously permissive, stating that an appeal "may" be taken from an
interlocutory order, but not requiring that it be to preserve later review of that order. Anderson v.
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Financial Matters, Inc., 285 Ill. App. 3d 123, 135 (1996). The timing of defendants' appeal
therefore has no bearing on our decision.
¶ 24 Nor are we persuaded that the corporate defendants' limited participation in discovery
was sufficient, on its own, to constitute waiver. Where they responded to plaintiff's discovery
requests and complied with the circuit court's discovery orders, but did not propound their own
discovery requests or depose any witnesses prior to asserting their right to arbitrate, defendants'
participation was merely responsive and not inconsistent with the right to arbitrate. Compare
Edward Electric Co. v. Automation, Inc., 164 Ill. App. 3d 547, 554 (1987) (noting counter-
defendant initiated no discovery and holding its "participation in the litigation was merely
responsive") and Kostakos, 142 Ill. App. 3d at 537 (noting defendants did not serve
interrogatories or take depositions and affirming circuit court's order granting their motion to
compel arbitration) with Woods v. Patterson Law Firm, P.C., 381 Ill. App. 3d 989, 996 (2008)
(concluding defendants "actively participated in discovery" by issuing interrogatories and
seeking to take depositions, discovery tools not readily available in arbitration proceedings).
¶ 25 By filing an answer asserting an affirmative defense unrelated to the arbitration
provision, however, the corporate defendants in this case waived their right to arbitrate plaintiff's
claims against them. Defendants argue that the mere act of answering a complaint does not
constitute waiver. As the circuit court noted, however, the cases defendants rely on for this
proposition represent the exception rather than the rule. Illinois courts have found that filing an
answer or counterclaim does not result in automatic waiver of the right to arbitrate only where a
defendant is statutorily required to assert responsive claims within a short time in order to
preserve lien rights. See, e.g., Edward Electric, 164 Ill. App. 3d at 549, 554-55 (noting that "[a]
mechanic's lien is valid only if each statutory requirement *** is scrupulously observed" and
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holding the defendant's participation in the litigation did not constitute a waiver because it was
"merely responsive" and the pleadings it filed were merely "to protect its rights"); TSP-Hope,
382 Ill. App. 3d at 1175-76 (holding defendant did not waive the right to arbitrate by filing an
answer and counterclaim to prevent forfeiture of a lien). Where, as here, a defendant files an
answer without simultaneously asserting the right to arbitrate, Illinois courts generally find that a
waiver has occurred. Compare Gateway Drywall & Decorating, Inc. v. Village Construction Co.,
76 Ill. App. 3d 812, 817 (1979) (waiver where defendant filed an answer and setoff claims
without asserting the right to arbitrate); Epstein v. Yoder, 72 Ill. App. 3d 966, 972 (1979) (waiver
where defendant filed an answer omitting any reference to arbitration) with Kostakos, 142 Ill.
App. 3d at 535-36 (no waiver where defendant filed an answer asserting the arbitration provision
at issue as an affirmative defense); Kessler, Merci, & Lochner, Inc. v. Pioneer Bank & Trust Co.,
101 Ill. App. 3d 502, 509 (1981) (no waiver where defendant filed an answer that included the
affirmative defense of the arbitration agreement, along with a counterclaim in the alternative);
Jenkins v. Trinity Evangelical Lutheran Church, 356 Ill. App. 3d 504, 508 (2005) (no waiver
where defendants first filed a motion for summary judgment asserting arbitration as the exclusive
remedy for disputes between the parties and later filed an answer specifically raising the court's
lack of jurisdiction as an affirmative defense).
¶ 26 Defendants raise two additional reasons why their answer should not be construed as a
waiver of the right to arbitrate the claims in this case. They first contend that they denied
plaintiff's allegations that jurisdiction and venue were proper in the circuit court. Without
considering whether this alone would be sufficient to preserve their right to arbitrate, we note
that this is not what the corporate defendants in fact did. In their answer to plaintiff's initial
complaint they stated that they were "without knowledge or information sufficient to form a
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belief as to the truth" of those allegations, language we find is not the equivalent of a denial.
¶ 27 We furthermore reject defendants' reliance on People ex rel. Delisi Construction Co., v.
Board of Education, Willow Springs School District 108, 26 Ill. App. 3d 893, 895-96 (1975) for
their proposition that "[w]here a defendant contests the existence of a valid and binding contract
between the parties, waiver of a contractual right to arbitrate cannot occur until such time as a
court has found such a contract to exist." In Delisi, the defendant school board told the plaintiff
construction company that it had submitted the winning bid on a project and could begin work,
only to rescind the communication and state that it had awarded the contract to another bidder.
Id. at 894. The plaintiff sought to enforce the parties' communications as a binding offer and
acceptance, while the defendant contended no contract had ever been formed and disputed the
jurisdiction of the court to consider the claim of damages. Id. Under these circumstances, the
appellate court held the defendant did not waive its right to arbitrate the amount of damages by
waiting to assert that right until after the circuit court found a valid contract existed. Id. at 896.
Delisi is distinguishable from cases, like this one, where the parties agree that a contract exists.
See Diersen v. Joe Keim Builders, Inc., 153 Ill. App. 3d 373, 376 (1987) (finding Delisi
inapplicable where the parties fully executed a contract and agreed it existed, but disagreed
regarding whether it was valid and enforceable). Here, although defendants claim their answer
"denied the existence of the contract as it was alleged by the [p]laintiff" (emphasis added), this is
simply another way of stating the parties disagreed on matters of contract interpretation. Unlike
the defendant in Delisi, the corporate defendants in this case not only acknowledged the
existence of an employment agreement between plaintiff and the corporate defendants from the
start, but relied on it to assert the affirmative defense of plaintiff's breach. Accordingly, we find
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Delisi inapposite. 2
¶ 28 By including in their answer an affirmative defense other than the arbitration provision
itself, the corporate defendants furthermore submitted an arbitrable issue to the circuit court for
its consideration. Defendants acknowledge that they asserted a breach of contract by plaintiff as
an affirmative defense, but insist—because the court dismissed the defense on procedural
grounds (i.e., the failure to plead sufficient facts) and they elected not to amend—that they
"never submitted that affirmative defense to the [c]ourt for decision" (emphasis added). This
distinction is not relevant to our analysis. A party need not move for summary judgment, seek a
judgment on the pleadings, or participate in a trial on the merits for an issue to fairly be
considered "submitted" to the court. Gateway Drywall, 76 Ill. App. 3d at 816 (declining to so
construe Applicolor, Inc. v. Surface Cumbustion Corp., 77 Ill. App. 2d 260 (1966)); see also
Cencula v. Keller, 152 Ill. App. 3d 754, 758 (1987) (defendant "submitted arbitrable issues to the
trial court for determination" by filing an answer alleging additional credits offsetting his
liability, thus "put[ting] into issue many facts which appear[ed] to fall within the ambit of the
[parties'] arbitration clause"). Thus, the corporate defendants not only failed to assert the
arbitration provision as an affirmative defense, but submitted the arbitrable issue of an unrelated
affirmative defense to the circuit court for resolution. These actions were inconsistent with the
right to arbitrate and constituted a waiver of that right.
¶ 29 Accordingly, the circuit court did not err in ruling the corporate defendants waived their
right to arbitrate the claims against them in this case.
2
Delisi is further distinguishable where the arbitration clause at issue in that case provided that
arbitrable questions would be decided in accordance with the Construction Industry Arbitration Rules,
which in turn provided that " 'no judicial proceedings by a party relating to the subject matter of the
arbitration shall be deemed a waiver of the party's right to arbitrate.' " Delisi, 26 Ill. App. 3d at 896. No
equivalent rules are applicable in this case.
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¶ 30 2. The Individual Defendants' Ability to Enforce the Agreement
¶ 31 It is undisputed that Dr. Packer and Ms. Sartain signed the employment agreement as
corporate representatives and not in their individual capacities. Plaintiff argues that they are
therefore incapable of enforcing the arbitration provision, pursuant to the general rule that "under
basic principles of contract law, only parties to [an] arbitration contract may compel arbitration
or be compelled to arbitrate." Carter v. SSC Odin Operating Co., 2012 IL 113204, ¶ 55. The
circuit court agreed, citing this general rule in its opinion and order denying the individual
defendants' motions for summary judgment.
¶ 32 Defendants urge us to adopt an exception to this rule, recognized to some extent in cases
applying the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq. (2012)), that agents of a
signatory can enforce arbitration agreements entered into by their principal. See, e.g., Howells v.
Hoffman, 209 Ill. App. 3d 1004, 1008-09 (1991) (applying federal law to a case involving
interstate commerce and holding that a stockbroker could enforce an arbitration agreement
entered into between the brokerage house and its client); Arnold v. Arnold Corp.–Printed
Communications for Business, 920 F.2d 1269, 1281-82 (6th Cir. 1990) (holding that non-
signatory officers and members of a corporation's board of directors could enforce an arbitration
agreement entered into by the corporation). Defendants have directed our attention to no case,
however, in which a court applying the Illinois Uniform Arbitration Act (710 ILCS 5/1 et seq.
(West 2010)) has adopted the exception. In the absence of such authority, we find no compelling
reason to depart from the general rule that only parties to an agreement may enforce it. Had the
parties in this case wished to arbitrate future claims against the individual defendants, they could
easily have included an express provision to this effect in their agreement. Because they did not,
we likewise reject defendants' argument that they are entitled to enforce the arbitration provision
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as third-party beneficiaries. See Martis v. Grinnell Mutual Reinsurance Co., 388 Ill. App. 3d
1017, 1020 (2009) (the intention to directly, as opposed to incidentally, benefit a third party
"must be shown by an express provision in the contract identifying the third-party beneficiary by
name or by description of a class to which the third party belongs").
¶ 33 Even were we to adopt an exception extending the protection of an arbitration provision
to a signatory's disclosed agents, it seems unlikely it would apply here, where plaintiff's claim
against the individual defendants is based on allegations that they acted outside of the scope of
their agency to advance their own interests at the company's expense. In a supplement to oral
argument, defendants refer us to two cases cited in their brief, Bass v. SMG, Inc., 328 Ill. App. 3d
492 (2002) and Rao v. Rao, 718 F.2d 219 (7th Cir. 1983), as examples of cases where courts
permitted individual defendants to enforce arbitration agreements signed by their principals, even
though the individuals were alleged to have acted outside of their employment. We find these
cases unpersuasive. The court in Bass was never called upon to decide this issue where the
claims against the non-signatory agent were settled before the case reached the appellate court.
328 Ill. App. 3d at 494-95. And in Rao, the court did not specifically address the ability of the
individual defendant to compel arbitration as an agent because it concluded that he was in fact a
party to the contract. 718 F.2d at 225.
¶ 34 We conclude that the individual defendants were not entitled to enforce the arbitration
provision in plaintiff's employment agreement. Because we affirm the circuit court's judgment on
this basis, we need not consider whether the conduct of these defendants would otherwise have
constituted a waiver of that right or whether plaintiff's claim against them "resulted from" the
employment agreement.
¶ 35 B. Jury Demand
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¶ 36 Defendants further contend that the circuit court erred in allowing plaintiff to file an
untimely jury demand. It is undisputed that plaintiff did not initially request a jury trial when he
filed his complaint on February 25, 2011. At a status hearing over a year later, on May 7, 2012,
plaintiff orally moved for leave to do so in connection with his amended complaint, a request the
court granted. In a civil case, a plaintiff generally forfeits his right to a trial by jury if he fails to
file a jury demand with the clerk at the time the action is commenced. 735 ILCS 5/2-1105(a)
(West 2010). "A party seeking to file a late jury demand must show good cause for the delay and
an absence of prejudice or inconvenience." Baldassari v. Chelsa Development Group, Inc., 195
Ill. App. 3d 1073, 1077 (1990). Because "[a] motion to file a late jury demand is addressed to the
sound discretion of the trial court, *** absent an abuse of [that] discretion, the court's
determination with respect to allowance or denial of the motion should not be disturbed." Brown
v. Scotillo, 104 Ill. 2d 54, 59-60 (1984).
¶ 37 Defendants argue that plaintiff was required to show good cause beyond the mere fact
that he was amending his complaint or had inadvertently failed to request a trial by jury at the
outset of the case. They further contend that they were prejudiced by the late filing because it
meant they did not know until over a year into the litigation that plaintiff would seek a jury trial
and, by that point, the circuit court had already found the corporate defendants waived their right
to arbitration. 3
¶ 38 Plaintiff argues that defendants forfeited this issue by failing to make a contemporaneous
objection or raise the claim of error in their post-trial motion. Although defendants state
plaintiff's motion for leave was granted over their objection, this is not indicated in the circuit
3
It is unclear how this fact demonstrates prejudice to defendants, where they have always maintained,
as they do now on appeal, that they did not waive their right to arbitrate. Defendants do not argue, for
example, that they would have sought interlocutory review of the circuit court's ruling on that issue if they
had known that plaintiff would seek a jury trial.
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court's order and defendants direct our attention to nothing else in the record on appeal indicating
a contemporaneous objection was made. Plaintiff, for his part, insists that no defendant objected
to the jury demand at any time in the circuit court. On this record, where the circuit court's order
does not indicate that a contemporaneous objection was made or provide the court's reasoning,
and where a transcript of the status conference or bystander’s report is not provided, we are
unable to conclude that the circuit court abused its discretion. See H. Vincent Allen & Associates,
Inc. v. Weis, 63 Ill. App. 3d 285, 296 (1978) (reviewing court was unable to reach the issue
where the record on appeal contained no objection by the defendant at trial to proceeding with a
jury). In their reply, defendants blame the lack of documentation on plaintiff for "improperly"
making an oral, as opposed to a written motion. The authority they cite for the proposition that
plaintiff was required to make a written motion, however, makes no mention of such a
requirement. See 735 ILCS 5/2-1105 (West 2010); Brown, 104 Ill. 2d 54. We see no reason the
circuit court should not have treated plaintiff's oral motion like any other motion. See Modern
Mailing Systems, Inc. v. McDaniels, 191 Ill. App. 3d 347, 351 (1989) ("an oral motion *** seeks
relief from the court just as surely as a signed, written motion"). It is furthermore well
established that "[a]ny doubts which may arise from the incompleteness of the record will be
resolved against the appellant." Foutch v. O'Bryant, 99 Ill. 2d 389, 392 (1984) (where no
transcript existed, there was no basis for holding the trial court abused its discretion in denying a
motion). "Without an adequate record preserving the claimed error, [we] must presume the
circuit court had a sufficient factual basis for its holding and that its order conforms with the
law." Corral v. Mervis Industries, Inc., 217 Ill. 2d 144, 157 (2005). Accordingly, we hold the
circuit court did not err in granting plaintiff's motion for leave to file a late jury demand.
¶ 39 C. Tortious Interference with Contract
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¶ 40 Defendants additionally argue that the judgment entered against the individual defendants
for tortious interference with contract must be reversed because the claim fails as a matter of law,
the circuit court failed to properly instruct the jury, and the jury's verdict was against the
manifest weight of the evidence. For the reasons that follow, we affirm the circuit court's
judgment.
¶ 41 1. Judgment As a Matter of Law
¶ 42 The individual defendants initially argue that plaintiff's claim for tortious interference
with contract fails as a matter of law, such that they were entitled to dismissal, summary
judgment, a directed verdict, and a judgment notwithstanding the verdict. The elements of the
claim are: "(1) the existence of a valid and enforceable contract between the plaintiff and
another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s intentional
and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other,
caused by the defendant’s wrongful conduct; and (5) damages." (Internal quotation marks
omitted.) HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55
(1989). We review de novo a circuit court's determination of whether a claim fails as a matter of
law. Chandler v. Illinois Central R.R. Co., 207 Ill. 2d 331, 349 (2003) (dismissal); Seymour v.
Collins, 2015 IL 118432, ¶ 42 (summary judgment); Lawlor v. North American Corp. of Illinois,
2012 IL 112530, ¶ 37 (directed verdict and judgment n.o.v.).
¶ 43 "It is settled law that a party cannot tortiously interfere with his [or her] own contract
***." Douglas Theater Corp. v. Chicago Title & Trust Co., 288 Ill. App. 3d 880, 884 (1997).
The individual defendants contend that they were not outsiders capable of tortious interference
because they signed the employment agreement on behalf of the corporate defendants, were
shareholders, and comprised a majority of the board of directors and the board's managing
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committee. "The mere fact that [a] defendant was acting as a corporate officer," however, "will
not render the defendant and the corporation identical." Cress v. Recreation Services, Inc., 341
Ill. App. 3d 149, 176 (2003). The situation in Rao, 718 F.2d at 225, on which defendants rely, is
distinguishable where the defendant in that case was the company's sole officer, shareholder, and
director of the company. Id. Nor can plaintiff's earlier failed attempt to pierce the corporate veil
be construed as an admission with respect to the claims he later took to trial. See Bargman v.
Economics Laboratory, Inc., 181 Ill. App. 3d 1023, 1032 (1989) ("alternative fact pleading made
in good faith cannot be used as an admission against interest").
¶ 44 Defendants cite a number of cases standing for the related propositions that the purpose
of a corporate entity is to immunize officers from individual liability so that they can be free to
act in the company's best interests (see, e.g., IOS Capital, Inc. v. Phoenix Printing, Inc., 348 Ill.
App. 3d 366, 373 (2004)) and courts are reluctant to recognize actions by employees against
employers for conduct within the scope of their duties (see, e.g., Daup v. Cellular, Inc., 737
N.E.2d 128, 137-38 (Ohio Ct. App. 2014)). Plaintiff presented evidence at trial in support of his
theory of liability, however, that the individual defendants acted in their own self-interest,
outside the scope of their duties, and to the detriment of plaintiff and the corporate defendants.
Defendants have made no convincing argument for why plaintiff's claim for tortious interference
with contract fails as a matter of law.
¶ 45 2. Jury Instructions
¶ 46 Defendants contend their proposed jury instructions for tortious interference with contract
were erroneously denied with respect to three issues: actual malice, the conditional privilege or
business judgment rule, and proximate cause. 4 A litigant is entitled to clear and fair jury
4
Defendants also argue the circuit court erred in instructing the jury that "a defendant that is liable for
tortious interference is liable for the entire loss that he has caused, irrespective of the terms of the
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instructions on each theory that is supported by the evidence; it is error, however, for a circuit
court to give an instruction that is not based on the evidence. Leonardi v. Loyola University of
Chicago, 168 Ill. 2d 83, 100 (1995). "The question of what issues have been raised by the
evidence is within the discretion of the trial court." Id. Even where the evidence is slight, we
"may not reweigh it or determine if it should lead to a particular conclusion." Id. We will
therefore not reverse based on an improper instruction unless it is evident that the instruction
"clearly misled the jury." King v. Clemons, 264 Ill. App. 3d 138, 143 (1994).
¶ 47 Illinois courts "recognize a privilege in intentional interference with contract cases where
the defendant was acting to protect an interest which the law deems to be of equal or greater
value than the plaintiff’s contractual rights." HPI Health Care, 131 Ill. 2d at 157. Because "the
duty of corporate officers and directors to their corporations’ shareholders outweighs any duty
they might owe to the corporations’ contract creditors," our supreme court has recognized that
corporate officers and directors are privileged "to use their business judgment and discretion on
behalf of their corporations." Id. A defendant who is otherwise protected by the privilege,
however, "is not justified in engaging in conduct which is totally unrelated or even antagonistic
to the interest which gave rise to [the] privilege." Id. at 158. In such cases, "it is the plaintiff’s
burden to plead and prove that the defendant’s conduct was unjustified or malicious." Id. at 156.
In this context, "[t]he term 'malicious,' *** simply means that the interference must have been
intentional and without justification." Id. at 156-57. In HPI Health Care, our supreme court
provided the following illustration of these principles:
"For example, a hospital management company, whose privilege is based upon
the management company’s role in exercising business judgment on behalf of the
contract." Because, as explained infra, we affirm the circuit court's ruling that plaintiff's damages for
tortious interference with contract were not limited to the amount of damages he could recover for breach
of contract, we conclude the circuit court did not abuse its discretion in issuing this instruction to the jury.
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company’s hospital, would not be justified in inducing a breach of contract solely
for the management company’s gain, or solely for the purpose of harming the
plaintiff, since such conduct would not have been done to further the hospital’s
interests." Id. at 158-59.
¶ 48 Here, defendants contend the circuit court erred by refusing to instruct the jury that
plaintiff was required to prove the individual defendants acted with actual malice. In the absence
of an Illinois Pattern Jury Instruction on this cause of action, the circuit court rejected defendants'
proposed instruction, which stated as follows:
"In order to prove that [the individual defendants] intentionally and
unjustifiably induced [the corporate defendants] to breach the contract, [plaintiff]
must prove that [the individual defendants] acted with actual malice. In order to
establish actual malice, [plaintiff] must prove that [the individual defendants]
acted intentionally and unjustifiably: (1) solely for their own personal gain; and/or
(2) solely for the purpose of harming Dr. Koehler."
¶ 49 The court instead gave the following instructions, modified and adopted from those
proposed by plaintiff and based on the same authority as defendants' proposed instruction:
"Plaintiff has the burden of proving each of the following propositions in
his claim for tortious interference with the Employment Agreement against [the
individual defendants]:
First, that [the individual defendants] intentionally and without
justification induced a contractual breach of the Employment Agreement."
***
The law recognizes that corporate officers enjoy a privilege to use their
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business judgment and discretion when acting in the best interests of the
corporation. This is also known as the business judgment rule.
This privilege does not apply where the conduct of the corporate officers
and directors was unjustified, such as when the officers or directors act solely out
of self-interest and/or solely to harm the plaintiff.
Thus, in order to prove that [the individual defendants] intentionally and
unjustifiably induced [the corporate defendants] to breach the contract, [plaintiff]
must prove that [the individual defendants] acted solely out of self-interest, and/or
solely to harm [plaintiff].
¶ 50 Although the circuit court refused to include the words "actual malice," the instruction
given otherwise conveyed the same information to the jury as defendants' proposed instruction,
i.e., that plaintiff was required to prove intentional and unjustifiable conduct on the part of the
individual defendants by establishing that they acted solely for their own personal gain or to
harm plaintiff. Defendants separate proposed definition of "actual malice" as "more than ill will,"
"more than mere malice," and "a positive desire and intention to injure another person," although
it may resemble the ordinary definition of the word—i.e.," '[t]he desire to harm others, or to see
others suffer; ill will; spite' " (Martin v. State Journal-Register, 244 Ill. App. 3d 955, 962 (1993)
(quoting American Heritage Dictionary of the English Language 790 (1975)))—differs
significantly from its meaning as a term of art in this context (Scholwin v. Johnson, 147 Ill. App.
3d 598, 607-08 (1986) ("The term 'malicious' used in this context does not connote ill will,
hostility, or an intent to injure, but it means intentionally and without just cause." (emphasis
added.)). Given the real potential that jurors would mistakenly construe the words "actual
malice" according to their plain meaning, the circuit court did not abuse its discretion in refusing
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defendants' proposed instructions.
¶ 51 Defendants additionally argue that plaintiff was required to prove the individual
defendants acted both for their own gain and contrary to the company's best interests, though
they identify no specific proposed instruction of theirs that the court erroneously refused in this
regard. The instruction given required plaintiff to prove that the individual defendants acted
"solely out of self-interest," just as defendants' proposed instruction required plaintiff to prove
that they acted "solely for their own personal gain." In both, use of the word "solely" adequately
addresses the possibility that a corporate officer's actions taken in his own self-interest might
also be in the best interests of the company. We similarly reject defendants' argument that the
instructions given were confusing simply because the individual defendants were shareholders;
just because they were shareholders does not mean, as defendants contend, that any action taken
in their own self-interest was "necessarily" in the company's best interest. Finally, we agree with
the circuit court that defendants' proposed instruction stating that corporate officers are entitled
to put the company's interests over those who contract with the company was sufficiently
incorporated into plaintiff's proposed instruction. 5
¶ 52 Defendants additionally contend the circuit court improperly instructed the jury on
causation. Although proximate cause was mentioned in connection with the instruction on
punitive damages, defendants argue the court erred by failing to include it in the instruction for
compensatory damages and in refusing defendants' proposed instruction that would have defined
the term for the jury. Defendants' position is that a proximate cause instruction was necessary
5
Where defendants note only that "numerous other instructions" on the qualified privilege and business
judgment rule were rejected, but fail to identify a specific error on the part of the circuit court, their
argument is forfeited. See Pecora v. Szabo, 109 Ill. App. 3d 824, 825-26 (1982) (the appealing party may
not put the burden of argument on the appellate court); Chicago School Reform Board of Trustees v.
Illinois Educational Labor Relations Board, 315 Ill. App. 3d 522, 532 (2000) (conclusory assertions
without supporting analysis are insufficient to preserve arguments for review).
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because "there were many possible causes of [p]laintiff not being paid what he could have been
paid under the Agreement." Plaintiff insists, however, that such an instruction was not necessary
because "[t]here was no argument or evidence at trial suggesting any other 'cause' or that
proximate cause was a disputed issue."
¶ 53 Although defendants insist that "many other possible causes of [plaintiff's damages
[were] in evidence," including the company's revenue losses, the economy, plaintiff's
inexperience, pending sexual harassment claims, the loss of employees, dissent over plaintiff's
performance as CEO, and "the feeling that a change had to be made," they fail to cite any
evidence in the record supporting this argument. Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013)
(argument must be supported by citation to the pages of the record relied on and points not
argued are forfeited). Even if the issue is not forfeited, we cannot conclude that the circuit court
abused its discretion in refusing defendants' proposed instructions. Unlike the wrongful death
cases defendants cite, the evidence in this case presented no obvious contributing or concurring
causes beyond the vague notion that the company might have terminated plaintiff's employment
anyhow, for any number of reasons. See Heitz v. Hogan, 134 Ill. App. 3d 352, 356 (1985)
(decedent was killed in the automobile accident that was the subject of the lawsuit, but the
coroner's report stated his immediate cause of death was cardiac arrest); Chambers v. Rush-
Presbyterian-St. Luke's Medical Center, 155 Ill. App. 3d 458, 467 (1987) (plaintiff's expert
testified that both the coma alleged to have been caused by defendants' medical negligence and
the decedent's preexisting cancer concurred to cause his death). The circuit court heard the
evidence firsthand and concluded that it did not support giving defendants' proposed instructions.
It is not our role to reweigh the evidence to determine whether a different result should have
been reached.
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¶ 54 Considered in their entirety, the instructions in this case fairly and fully informed the jury
on causation. The jury was instructed that it was plaintiff's burden to prove that each element of
damages claimed "occurred as a direct and natural result" of the individual defendants' tortious
interference. Most of the "other possible causes" that defendants raise, moreover, are reasons the
company might have had the legal right to terminate plaintiff's agreement for cause, an
affirmative defense that the jury was instructed to consider ("Defendants have raised and have
the burden to prove that Plaintiff['s] claim is barred because Plaintiff was terminated for cause
*** If you find that Plaintiff was terminated for cause your verdict must be for Defendants.").
¶ 55 Accordingly, we hold the court did not abuse its discretion in refusing defendants' jury
instructions.
¶ 56 3. Manifest Weight of the Evidence
¶ 57 Providing no citations to the record, defendants argue the jury's verdict was against the
manifest weight of the evidence and, specifically, that the evidence failed to support the jury's
finding that the individual defendants acted solely for their own benefit or to harm plaintiff.
Defendants insist that, at trial, the "undisputed evidence" established "that Dr. Packer, Ms.
Sartain and Mr. Denniston acted in the interests of the Packer Companies in moving Plaintiff to a
new position due to the serious problems existing at Packer Engineering that time." 6 Although
defendants may have presented evidence tending to establish this, it was certainly not
undisputed. Plaintiff presented evidence of his own tending to show that the individual
defendants acted to cover up the investigation of financial improprieties and to punish plaintiff
for exposing their wrongful conduct. We will not set aside a jury verdict unless, considered in the
6
For the first time on appeal, the individual defendants additionally claim that their reliance on the advice of
counsel is "relevant to" the issue of whether they acted with the requisite intent. This argument is forfeited. These
defendants did not assert reliance on the advice of counsel as an affirmative defense in their initial answer, nor does
the record indicate that they sought leave to amend their pleadings at any time prior to judgment. See Horwitz v.
Bankers Life & Casualty Co., 319 Ill. App. 3d 390, 399 (2001) (citing 735 ILCS 5/2-616-(a) (West 1998)).
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light most favorable to the appellee, it is contrary to the manifest weight of the evidence.
Niewold v. Fry, 306 Ill. App. 3d 735, 747 (1999). "A jury's verdict is against the manifest weight
of the evidence only where the opposite conclusion is clearly evident or when the verdict appears
to be arbitrary or to be unsupported by the evidence." Id. Here, both sides marshaled significant
evidence to support their respective versions of events over the course of a three-week trial. The
jury's verdict was not arbitrary or unsupported by the evidence and we will not disturb it.
¶ 58 D. Compensatory Damages
¶ 59 For his tortious interference with contract claim against the individual defendants, the
jury awarded plaintiff a total of $1,025,000 in compensatory damages, comprised of salary
($368,333), severance pay ($170,000), and the value of stock ($765,850), less plaintiff’s earnings
during the contract period (-$171,703) and the amount awarded to him under the breach of
contract claim (-$100,000). Defendants claim these amounts were improper and must be
reversed. They argue that (1) plaintiff's damages should have been limited to those available for
breach of contract and not what plaintiff subjectively expected to receive under the contract; (2)
(2) the award of salary for the remainder of the four-year term of the contract was improper
where there was no acceleration clause; (3) plaintiff was entitled to stock, not to be paid the
value of the stock; (4) plaintiff was not entitled to an additional year of severance pay; and (5)
the damages awards against the individual defendants were “fatally inconsistent."
¶ 60 “[T]he amount of recoverable damages is a question of fact for the jury ***.” Tri-G, Inc.
v. Burke, Bosselman & Weaver, 222 Ill. 2d 218, 252 (2006). We consider whether the jury’s
verdict in this regard was against the manifest weight of the evidence, i.e., whether it was
arbitrary, unreasonable, or not based upon any evidence. Maple v. Gustafson, 151 Ill. 2d 445,
454 (1992). “[T]he measure of damages upon which the jury’s factual computation is based is a
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question of law for the court ***.” Tri-G, 222 Ill. 2d at 252. We review it de novo. Magna Trust
Co. v. Illinois Central R.R. Co., 313 Ill. App. 3d 375, 380 (2000) (issues which are purely legal
in nature are subject to de novo review).
¶ 61 1. Extent of Recoverable Damages
¶ 62 The circuit court instructed the jury that, in connection with his claim for breach of
contract against the corporate defendants, plaintiff could only seek severance pay and related
benefits provided for in the severance pay provision of the agreement. In connection with his
claim for tortious interference against the individual defendants, however, the court instructed
the jury that it could award plaintiff damages equal to what he would have received if the
agreement had been fully performed. Defendants argue that, under either claim, plaintiff was
only entitled to one year of severance pay and related benefits. They contend that, where plaintiff
alleged the individual defendants harmed him by tortiously causing a breach of contract it "defies
logic" that he could recover more from them than he could for the actual breach.
¶ 63 In making this argument, defendants overlook a key fact: they are not parties to the
agreement. The corporate defendants are the ones that contracted with plaintiff and negotiated
the terms of the employment agreement, including the provision governing severance pay, which
acted to limit their financial exposure in the event that they elected to terminate plaintiff's
employment. Contrary to defendants' arguments, it does not "defy logic" that a party to an
agreement, and only a party to that agreement, may avail itself of a negotiated term of this sort.
See 155 Harbor Drive Condominium Ass'n v. Harbor Point Inc., 209 Ill. App. 3d 631, 647
(1991) ("there is a strong presumption that parties to a contract intend that the contract's
provisions apply to only them and not to third parties") (emphasis in original and internal
quotation marks omitted)). As discussed, supra, the individual defendants are neither parties to
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the agreement nor intended third-party beneficiaries. With no right to enforce a provision of the
agreement negotiated for the benefit of the parties, they remain, under well-established principles
of tort law, responsible for "all damages which naturally flow from the commission of the tort."
(Internal quotation marks omitted.) Keiser-Long v. Owens, 2015 IL App (4th) 140612, ¶ 37.
¶ 64 "[D]amages recoverable when a plaintiff proves intentional interference with contractual
relations include pecuniary loss of the benefits of the contract; actual harm to reputation ***; and
consequential losses for which the interference is the legal cause" (Reuben H. Donnelley Corp. v.
Brauer, 275 Ill. App. 3d 300, 313 (1995) (citing Restatement (Second) of Torts § 774A(1)
(1979))), less any damages separately paid by the breaching party (Restatement (Second) of
Torts § 774A(2) (1979)). In this case, plaintiff sought only the first category of damages, the
pecuniary loss of the benefits of the agreement. Defendants insist the circuit court ruled that
plaintiff's damages in this regard were whatever he subjectively expected to receive from the
agreement. We find no evidence of this in the record. In its ruling on the parties overlapping
motions in limine, the court merely noted that "[i]t [wa]s possible that a jury could conclude that
[plaintiff] [wa]s entitled to damages in excess of the severance amount as a result of the
[i]ndividual [d]efendants' tortious conduct." At trial, the court first instructed the jury that
plaintiff could recover damages equal to what he would have received if the agreement had been
fully performed, and then specifically spelled out those categories of damages ("salary, benefits,
severance and other compensation, including incentive compensation, and the value of The
Packer Group, Inc. stock"). The fantastic hypothetical defendants present—that plaintiff could
have testified that he expected to work as CEO of Packer Engineering until he was 95 years old
and had earned $50 million—does not represent an outcome that was possible under the court's
instructions. Pursuant to those instructions, plaintiff's expectations were only relevant insofar as
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they were expressly stated in his employment agreement.
¶ 65 Finally, defendants contend the circuit court improperly rejected their proposed
instruction informing the jury that plaintiff had the burden to prove damages with a reasonable
degree of certainty and not based on speculation. We will only reverse a circuit court's decision
regarding what instructions are warranted by the evidence if the court abused its discretion and
its erroneous instructions "clearly misled the jury." King, 264 Ill. App. 3d at 143; Leonardi, 168
Ill. 2d at 100. Here, the benefits plaintiff could expect and which the circuit court directed the
jury to consider were those unambiguously enumerated in the employment agreement. Where,
under these circumstances, nothing in the record indicates there was a risk that the jury might
improperly award speculative damages, the circuit court did not abuse its discretion in denying
defendants' proposed instruction.
¶ 66 2. Salary
¶ 67 Defendants next argue that plaintiff was improperly awarded his salary for the remainder
of the four-year term set forth in his employment agreement, or through December 2012, where
that agreement contained no acceleration clause. Likening the employment agreement to an
installment contract, they contend plaintiff was only entitled to recover the value of past-due
installments. 7 Although defendants do not respond to plaintiff's contention that they forfeited this
argument by failing to raise it in their post-trial motion, we find no forfeiture here, where
defendants did argue in their post-trial motion that the salary award was improper. Parties are not
required to limit their arguments on appeal to those made below, but simply to preserve issues or
claims of error for appeal. Brunton v. Kruger, 2015 IL 117663, ¶ 76.
7
Defendants also note that plaintiff was required to mitigate his damages by seeking other employment.
They do not argue, however, that he failed to do so. Indeed, the jury reduced plaintiff's damages by the
amount of his earnings after his termination.
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¶ 68 We nevertheless agree with plaintiff that the salary award was proper. Defendants cite
Coburn Group, LLC v. Whitecap Advisors, LLC, No. 07 C 2448, slip op. at 4-6 (N.D. Ill. Nov. 9,
2010), for the proposition that future damages are not recoverable absent an acceleration clause.
By "future damages," however, the court in Coburn meant only those payments which, at the
time of trial, had not yet become due. The plaintiff in that case sued the defendant for breach of
contract and sought the present value of periodic commissions that would accrue after trial. The
court noted that the plaintiff could indeed collect the commissions if he succeeded in proving the
parties' agreement, but that he would simply have to wait for those debts to become due. Coburn
is inapplicable here, where the trial took place over a year after the four-year term of
employment in plaintiff's agreement had concluded. See also Lewis v. Loyola University of
Chicago, 149 Ill. App. 3d 88, 95 (1986) (noting that recoverable damages are limited to those
that have accrued up to the date of trial, because damages beyond that date are speculative and
uncertain). Plaintiff did not seek future damages because, by the time of trial, all of the payments
he claimed he was entitled to had accrued.
¶ 69 We are furthermore not convinced that plaintiff's employment agreement was an
installment contract. "Whether a given contract is or is not severable cannot be determined by
any precise rule; each case must depend in large part upon the specific terms of the contract
involved." Keeshin v. Levin, 31 Ill. App. 3d 790, 798 (1975). Here, defendants direct us to no
case where an employment agreement establishing an employee's annual salary was held to be an
installment contract. Courts are hesitant to find an agreement is severable or divisible where one
party's obligations are not readily apportioned with the other parties' periodic payments. See,
e.g., Mineral Resources, Inc. v. Classic Coal Corp., 115 Ill. App. 3d 114, 120 (1983). We are not
persuaded that the provision in the employment agreement at issue here, stating that plaintiff's
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salary would be "reviewed annually on the same terms and intervals as other senior executives,"
makes the contract an installment agreement like the one for monthly rental payments at issue in
Blackhawk Hotel Associates v. Kaufman, 85 Ill. 2d 59, 67-68 (1981).
¶ 70 Defendants alternatively argue that, regardless of any alleged breach of the employment
agreement, plaintiff would have been terminated along with all other employees when the
corporate defendants went out of business in January 2012, thus defeating his claim for any
salary he might otherwise have been paid in 2012. Defendants claim the circuit court erred in
refusing to admit evidence of the company's closing and the damages awarded by the jury for
lost wages that would have been earned in 2012 are speculative. We review a circuit court's
rulings regarding the admissibility of evidence for abuse of discretion. Salcik v. Tassone, 236 Ill.
App. 3d 548, 551 & n.1 (1992).
¶ 71 Citing Alimissis v. Nanos, 171 Ill. App. 3d 1005 (1988), plaintiff argues that the circuit
court's ruling was proper because damages are established at or near the time of the breach,
making evidence of anything that happened afterward irrelevant. Although Alimissis involved the
proper measure of damages for corporate stock (id. at 1010-11), we find it instructive where
liability for the lost wages plaintiff seeks also arose at the time of breach. Defendants argue that
the award of salary for 2012 has the effect of improperly treating plaintiff better than other
employees of the company, who were unable to receive wages during that time period. A jury
did not find, however, that prior to the company's closure, those other employees were
wrongfully denied the benefit of an agreement establishing a four-year term of employment.
Companies with existing debts and other obligations frequently go out of business and have
remedies available to them, including bankruptcy, receivership, and dissolution proceedings.
These subsequent events are relevant only to the defendants' ability to pay, and have no bearing
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on whether proximate cause existed at the time of breach, when the individual defendants'
liability for tortious interference arose. The circuit court's decision to preclude evidence of the
company's eventual closing was therefore not "arbitrary, fanciful, or unreasonable" such that "no
reasonable person would take the circuit court's view." People v. Ursery, 364 Ill. App. 3d 680,
686 (2006).
¶ 72 Accordingly, the jury's award of salary for the remainder of plaintiff's four-year term of
employment was proper.
¶ 73 3. Stock Value
¶ 74 As part of the compensation set out in his employment agreement, plaintiff was entitled
to receive 5% of authorized voting stock, to be earned/vested over the course of four years,
according to the following schedule: 10% after the first year, 30% after the second year, 60%
after the third year, and 100% after the full four-year term of employment. Defendants contend
the jury’s award of $765,850 for shares of The Packer Group stock was improper because, under
the employment agreement, plaintiff was only entitled to receive stock, not the value of stock.
Defendants argue that specific performance was the proper remedy where a company, like The
Packer Group, was closely held and not publicly traded, such that its stock had no real market
value. Plaintiff argues, however, that, in order to prevent defendants from improperly benefiting
from circumstances occurring after their wrongful conduct, the law provides that the proper
measure of damages for corporate stock is its market value at a time reasonably close to the date
of breach.
¶ 75 "Illinois courts have consistently held that money damages are the appropriate remedy for
breach of contract." Lake in the Hills Aviation Group, Inc. v. Village of Lake in the Hills, 298 Ill.
App. 3d 175, 185 (1998). "Specific performance is an equitable remedy in contrast to a remedy
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at law, which is the payment of money as a substitute for performance." Butler v. Kent, 275 Ill.
App. 3d 217, 226 (1995). The remedy is not available as of right but "rests within the sound
discretion of the trial court, based on all of the facts and circumstances in evidence." Although
money damages are the default, "[s]pecific performance can be available for causes of action
involving agreements on the sale or transfer of shares of stock where the shares are not available
on the open market." (Emphasis added.) Id. at 227. A party seeking specific performance must
support its argument with "clear, explicit and convincing evidence." Id. Defendants do not
indicate anywhere in the record where they specifically asked the court to limit plaintiff to the
remedy of specific performance, and we are aware of no case where a court so limited a
plaintiff's ability to seek money damages for stock, even difficult to value stock, in a breach of
contract or tortious interference with contract case. The cases defendants cite are distinguishable
for this very reason; they involve plaintiffs who requested specific performance in lieu of money
damages. Although specific performance was "available" to plaintiff under these circumstances,
defendants had no right to dictate the remedy plaintiff could pursue or to prevent plaintiff from
attempting to place a value on the shares of the closely held company. The circuit court therefore
did not abuse its discretion in admitting evidence regarding the value of the stock, including the
company's audited financial statements and Dr. Packer' surrender of his own stock in April 2010,
both establishing the stock's value at $28.90 per share.
¶ 76 Defendants' argument that the circuit court improperly refused to permit Mr. Brad Van
Horn, the individual who initially established this value, from testifying is forfeited where
defendants failed to make a sufficiently detailed offer of proof for the record. Defendants'
generic summary of what Mr. Van Horn would have testified to is insufficient information upon
which to base our review. People v. Andrews, 146 Ill. 2d 413, 421-22 (1992). The jury heard
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evidence from which it could establish a monetary value for the stock at issue here, and it is not
our role to reweigh that evidence. The jury's award of damages in this regard was not
"unreasonable, arbitrary and not based upon any of the evidence" and we will not disturb it.
Maple v. Gustafson, 151 Ill. 2d 445, 454 (1992).
¶ 77 4. Severance Pay
¶ 78 Defendants also take issue with the jury's award of severance pay and related benefits in
addition to its award of salary and stock. They argue that the award contradicts the circuit court's
ruling that the severance pay provision in plaintiff's employment agreement applied only during
the initial four-year term of employment. Defendants misread the court's order, which states
merely that "the severance pay provision plainly applies to a termination during the four-year
term of the contract." The court also stated that, for his tortious interference claim, the jury could
award plaintiff "damages in excess of the severance amount" (emphasis added), not instead of the
severance amount.
¶ 79 5. Inconsistent Awards
¶ 80 Defendants next contend that the differing compensatory damage amounts awarded
against the individual defendants—$720,000 against Dr. Packer and $205,000 against Ms.
Sartain 8—are “fatally inconsistent and cannot stand.” They direct us to no authority, however,
requiring the compensatory damages assessed against each defendant to be the same. Citing the
Mississippi case Baker & McKenzie, LLP v. Evans, 2011-CA-00110-SCT, ¶ 127 (Miss. 2013),
defendants contend that a claim for tortious interference with contract is not a claim involving
“fault,” and is therefore not subject to apportionment. The court in Baker, however, merely held
that a defendant was not entitled to a jury instruction on the affirmative defense of apportionment
of fault where he failed to articulate a defined duty owed to the plaintiff by the individual he
8
The jury also awarded $100,000 against Mr. Deniston.
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sought the instruction against and where the evidence in any case did not support such an
instruction. Id. at 128. In its analysis of this issue, the court never mentioned tortious interference
with contract, which was but one of several claims against the defendant in question. Id. We fail
to see how Baker in any way establishes the point of law it is cited for or what bearing it has on
an award of damages under Illinois law.
¶ 81 Defendants also cite Wottowa Insurance Agency, Inc. v. Bock, 104 Ill. 2d 311 (1984) for
their proposition that “[a]n inconsistent award of damages justifies a verdict being set aside and a
new trial.” Wottowa, however, did not involve differing compensatory damage amounts but,
rather, findings of fact by the jury that were completely at odds with each other. In that case, the
plaintiff alleged he had provided insurance coverage and credit extensions to two related
corporations; in count I he alleged that corporate officers failed to honor a guarantee agreement
making them personally liable for the obligations and in count II he alleged the officers
fraudulently inducing him to extend further credit to the corporations. Id. at 312-13. The jury
found the guarantee agreement was a corporate obligation, not a personal one, but nevertheless
awarded the plaintiff the damages he sought under count II. Id. at 313, 316. The appellate court
affirmed the judgment in part but our supreme court reversed and remanded for a new trial,
reasoning that, once the jury found the guarantee agreement was not a personal obligation, the
claim that the officers committed fraud by signing it with no intention of honoring it personally
necessarily failed; the jury's findings were irreconcilable and its verdicts legally inconsistent. Id.
In this case, the jury made no irreconcilable findings of this nature, but simply found the
individual defendants liable for different amounts. The jury's verdicts were not inconsistent.
¶ 82 According to defendants, there is no explanation for the differing damages awards where
the theory of liability, damages sought, and jury instructions were the same for both of the
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individual defendants. What they fail to acknowledge is that the evidence at trial did establish
that the two defendants engaged in different conduct and played different roles in the series of
events leading to plaintiff’s termination from Packer Engineering. The jury heard testimony, for
example, that the financial irregularities plaintiff uncovered related to Dr. Packer’s privately
owned business, New Vermillion; that Dr. Packer was the one who forbade plaintiff from
reviewing corporate financial information; that Dr. Packer exhibited hostile behavior toward
plaintiff; that Dr. Packer was the one who first proposed the idea of terminating plaintiff; and
that he formed the CEOC, an executive council to run the company that plaintiff was excluded
from and which demoted him and ultimately terminated his employment. Testimony was also
presented from which the jury could conclude that Ms. Sartain played a somewhat less
significant role and acted primarily to carry out her long-time boss’s orders. Under these
circumstances, we cannot conclude that the jury’s differing damages awards were arbitrary,
unreasonable, or not based upon any evidence. Maple, 151 Ill. 2d at 454.
¶ 83 E. Punitive Damages
¶ 84 Finally, defendants argue the jury’s award of punitive damages against the individual
defendants should be vacated because there was insufficient evidence to submit the issue to the
jury, the award resulted in a double punishment for the same conduct, and the amount of the
award was excessive, both constitutionally and in light of Illinois common law criteria. Plaintiff
contends the issue of punitive damages was properly submitted to the jury and the jury's award is
supported by the evidence adduced at trial.
¶ 85 1. Standards of Review
¶ 86 We first address the parties' disagreements regarding the applicable standards of review.
Citing Franz v. Calaco Development Corp., 352 Ill. App. 3d 1129, 1138 (2004), plaintiff insists
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that "the trial court's decision to submit the issue of punitive damages to the jury is reviewed for
abuse of discretion." Although we commend the court in Franz for its in-depth analysis of the
standard applicable to a review of the amount of a jury's punitive damages award, we decline to
follow it on this particular point where we find it contradicts controlling supreme court
precedent. In Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 186 (1978), our supreme court
unambiguously held that "the preliminary question of whether the facts of a particular case
justify the imposition of punitive damages is properly one of law." We note that the court in
Franz relied for this point on Proctor v. Davis, 291 Ill. App. 3d 265, 287 (1997) and LID
Associates v. Dolan, 324 Ill. App. 3d 1047, 1072 (2001), cases that in turn both relied on Levy v.
Markal Sales Corp., 268 Ill. App. 3d 355, 378-79 (1994). Levy involved punitive damages
awarded by the circuit court at the conclusion of a bench trial, however, and stood for a very
different proposition. Levy, 268 Ill. App. 3d at 378 ("[w]hether to award punitive damages is an
issue for the sound discretion of the trial court, and its decision will not be set aside absent an
abuse of discretion" (emphasis added and internal quotation marks omitted)). We therefore agree
with defendants that our review of the circuit court's preliminary decision to submit the issue of
punitive damages to the jury is de novo.
¶ 87 We agree with the parties that, for challenges to an assessment of punitive damages made
under Illinois common law criteria, the jury "will not be reversed unless the manifest weight of
the evidence shows that the assessment was so excessive as to demonstrate passion, partiality, or
corruption on the part of the decision-maker." Franz, 352 Ill. App. 3d at 1145. Plaintiff
erroneously contends that this standard applies equally to constitutional challenges. Defendants
are correct, however, that the separate constitutional question of whether a punitive damages
award is excessive in violation of due process is reviewed de novo. International Union of
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Operating Engineers, Local 150 v. Lowe Excavating Co., 225 Ill. 2d 456, 468-69 (2006). With
these standards in mind, we review the propriety of the punitive damages award in this case.
¶ 88 2. Submission of the Issue to the Jury
¶ 89 "Punitive, or exemplary, damages are not awarded as compensation, but serve instead to
punish the offender and to deter that party and others from committing similar acts of
wrongdoing in the future." Loitz v. Remington Arms Co., 138 Ill. 2d 404, 414 (1990). Due to
their penal nature, "courts must take caution to see that punitive damages are not improperly or
unwisely awarded." Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 188 (1978). Punitive damages are
proper where a defendant's conduct "evinces a high degree of moral culpability, that is, when the
tort is committed with fraud, actual malice, deliberate violence or oppression, or when the
defendant acts willfully, or with such gross negligence as to indicate a wanton disregard of the
rights of others." (Internal quotation marks omitted.) Slovinski v. Elliott, 237 Ill. 2d 51, 58
(2010).
¶ 90 The circuit court did not err in submitting the issue of punitive damages to the jury in this
case. As the court noted in its order denying the individual defendants' motions for summary
judgment, plaintiff had "submitted evidence that the [i]ndividual [d]efendants conspired to
terminate his employment as a result of his intention to reveal financial irregularities and other
potentially unscrupulous business practices committed by them," that these defendants "operated
in bad faith, to protect their own interests and to harm [plaintiff]," and that "their actions were
adverse to the company's interests." The conduct described in the Seventh Circuit cases cited by
defendants is factually distinguishable. See Roboserve, Inc. v. Kato Kagaku Co., 78 F.3d 266,
276 (7th Cir. 1996) (finding "little more than simple deceit and obfuscation" by sophisticated
advocates operating within a competitive marketplace); Europlast, Ltd. v. Oak Switch Systems,
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Inc., 10 F.3d 1266, 1276-77 (7th Cir. 1993) (finding "little if any evidence of 'gross,' 'wanton' or
'malicious' conduct" on the part of a manufacturer sued by its supplier for terminating the parties'
contract). The circuit court did not err by submitting the issue to the jury where plaintiff had
established a prima facie case for punitive damages.
¶ 91 3. Double Punishment
¶ 92 Arguing that "[p]unitive damages should not be allowed where the same conduct
provides the basis for compensatory damages," the individual defendants next contend that they
were erroneously subjected to double punishment for the same conduct. In the cases they cite,
however, the same outrageous conduct justifying the imposition of punitive damages also
constituted an element of the cause of action. See Eckenrode v. Life of America Insurance Co.,
470 F.2d 1, 3 (7th Cir. 1972) (punitive damages not warranted where outrageous conduct was an
element of the underlying claim for intentional infliction of emotional distress); Knierim v. Izzo,
22 Ill. 2d 73, 88 (1961) (same; "Since the outrageous quality of the defendant's conduct forms
the basis of the action, the rendition of compensatory damages will be sufficiently punitive.").
¶ 93 Where an award of punitive damages is based on misconduct going above and beyond
that required to establish the underlying tort, this problem does not arise. Cress, 341 Ill. App. 3d
at 182. Such is the case here, where the wrongful conduct that plaintiff must establish to recover
on a claim for tortious interference with contract—the "intentional and unjustified inducement of
a breach of the contract" (internal quotation marks omitted) (HPI Health Care Services, Inc. v.
Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55 (1989))—does not rise to the level of, and is
not coextensive with, the outrageous conduct evincing a "high degree of moral culpability" that
is required for an award of punitive damages (Slovinski, 237 Ill. 2d at 58). Cf. E.J. McKernan Co.
v. Gregory, 252 Ill. App. 3d 514, 532, 534-35 (1993) (affirming punitive damages award based
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on "willful and wanton conduct" exceeding the "intentional and unjustified interference" required
to establish a claim for tortious interference with a business expectancy (internal quotation marks
omitted)). The award of punitive damages in this case therefore did not improperly subject the
individual defendants to double punishment for the same conduct. 9
¶ 94 4. Constitutionality of the Award
¶ 95 Defendants next argue the jury's award of punitive damages should be vacated because it
is unconstitutionally excessive in violation of the due process clause of the fourteenth
amendment (U.S. Const., amend. XIV). The Supreme Court has established three "guideposts"
for courts considering this issue: "(1) the degree of reprehensibility of the defendant's
misconduct, (2) the disparity between the actual or potential harm suffered by the plaintiff and
the punitive damages award, and (3) the difference between the punitive damages awarded by
the jury and the civil penalties authorized or imposed in comparable cases." State Farm Mutual
Automobile Insurance Co. v. Campbell, 538 U.S. 408, 409 (2003).
¶ 96 To assess the reprehensibility of a defendant's conduct, we consider the following factors:
(1) whether "the harm caused was physical rather than economic"; (2) whether "the tortious
conduct evinced an indifference to or a reckless disregard of the health or safety of others"; (3)
whether "the target of the conduct had financial vulnerability"; (4) whether the conduct involved
repeated actions or was an isolated incident; and (5) whether "the harm was the result of
intentional malice, trickery, or deceit, or mere accident." Id. at 419. "The existence of any one of
9
Nor can dicta in Ampat/Midwest, Inc. v. Illinois Tool Works Inc., 896 F.2d 1035, 1044 (7th Cir.
1990)—where the Seventh Circuit speculated that the trial court may have vacated an award of punitive
damages in an attempt to do rough justice where liability was uncertain—be construed to stand for the
proposition that punitive damages are improper in cases where a plaintiff receives a "generous award of
compensatory damages." Regardless of the size of an award for compensatory damages, punitive damages
are appropriately awarded where "the character of the conduct is of the sort that calls for deterrence and
punishment over and above that provided by a compensatory award." (Internal quotation marks omitted.)
Cress v. Recreation Services, Inc., 341 Ill. App. 3d 149, 182 (2003).
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these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages
award; and the absence of all of them renders any award suspect." Id.
¶ 97 Because the individual defendants' conduct caused no physical harm and did not
endanger the health or safety of others, the first two factors are not applicable. With respect to
the third, although plaintiff notes that he was raising a family with five children and purportedly
sacrificed a fully vested pension with his former employer to take the position at Packer
Engineering, defendants point out that he still had a partially vested pension, his wife was
employed as a physician, and he was able to secure six-figure employment upon leaving the
company. We do not conclude that plaintiff was financially vulnerable under these
circumstances.
¶ 98 The last two factors, however, do weigh in plaintiff's favor. Plaintiff presented evidence
at trial that the individual defendants' actions were not accidental, but that they intentionally
acted to protect themselves at the expense of plaintiff and the company, to suppress the
investigation into their alleged wrongdoing, and to punish plaintiff for his role in disclosing
information that initiated that investigation. The tortious interference with his employment
agreement that plaintiff complained of was not the result of an isolated action by these
defendants, but rather a course of conduct that was ongoing for some time before plaintiff's
demotion and eventual termination. A finding of reprehensibility does not require that all five
factors be met, but can rest, as here, on the existence of only two of the five factors. Tully v.
McLean, 409 Ill. App. 3d 659, 676 (2011) (citing Lowe Excavating Co., 225 Ill. 2d at 483). The
evidence presented at trial demonstrated that the individual defendants' conduct was sufficiently
reprehensible to justify an award of punitive damages.
¶ 99 Consideration of the second constitutional guidepost, "the disparity between the actual or
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potential harm suffered by the plaintiff and the punitive damages award" (State Farm, 538 U.S.
at 409), calls on us to consider the ratio between compensatory and punitive damages, keeping in
mind the Supreme Court's admonishment that "few awards exceeding a single-digit ratio *** will
satisfy due process." State Farm, 538 U.S. at 425. Defendants argue that, because plaintiff's
damages for tortious interference with contract should have been limited to his damages for
breach of contract (which were $100,000) the proper ratio is approximately 14:1. Because, as
discussed supra, we reject this argument, we consider the ratio between the compensatory and
punitive damages actually awarded by the jury. Against Dr. Packer, the jury awarded
compensatory damages of $720,000 and punitive damages of $1.2 million, resulting in a ratio of
1.7:1. Against Ms. Sartain, the jury awarded punitive damages of $150,000, an amount that is
less than the $205,000 in compensatory damages it awarded against her, resulting in an inverse
ratio of 1:1.4. In each case, the amount of punitive damages is well within the range found
constitutionally acceptable by courts. See, e.g., Tully, 409 Ill. App. 3d at 679 (affirming punitive
damages for breach of fiduciary duty that were within a 3:1 ration of compensatory damages).
¶ 100 With respect to the third and final constitutional guidepost, "the difference between the
punitive damages awarded by the jury and the civil penalties authorized or imposed in
comparable cases" (State Farm, 538 U.S. at 409), the parties agree that there is no law that
imposes a civil penalty, such as a fine, for tortious interference with contract. Defendants
nevertheless urge us to find that this factor weighs in favor of unconstitutionality by considering
a handful of awards made by juries and courts in other wrongful termination or tortious
interference cases. We decline to do so. The purpose of this guidepost is to "accord substantial
deference to legislative judgments concerning appropriate sanctions for the conduct at issue."
(Emphasis added and internal quotation marks omitted.) BMW of North America, Inc. v. Gore,
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517 U.S. 559, 583 (1996). Where the legislature has not spoken, there is nothing to consider.
Lowe Excavating, 225 Ill. 2d at 489.
¶ 101 We conclude that the award of punitive damages assessed against the individual
defendants was not unconstitutional. Plaintiff presented evidence at trial demonstrating that the
conduct of these defendants was sufficiently reprehensible, the amount awarded by the jury is
within an appropriate ratio of the compensatory damages awarded, and the legislature imposes
no civil penalty for similar conduct that we must take into consideration.
¶ 102 5. Appropriateness of the Award Pursuant to Common Law Criteria
¶ 103 Defendants separately argue that the punitive damages award in this case is improper
pursuant to Illinois common law considerations, which include "the nature and enormity of the
wrong, the financial status of the defendant, and the potential liability of the defendant." (Internal
quotation marks omitted.) E.J. McKernan Co., 252 Ill. App. 3d at 536. With respect to the first
consideration, the parties each do little more than recite the element and conclude that it weighs
in their favor. As noted above, however, plaintiff presented extensive evidence at trial regarding
the nature of the individual defendants' conduct. The jury considered this evidence and,
according to the signed verdict forms, found "the conduct was intentional, and that justice and
the public good require[d] additional damages to punish [the individual defendants] and to
discourage [them] and others from similar conduct." Defendants contend, and plaintiff does not
dispute, that the last consideration, the potential liability of the defendant, is a factor generally
considered in products liability actions that is not relevant to this case, where there are no other
claims at issue.
¶ 104 The individual defendants argue, however, that the second consideration would have
weighed against an assessment of punitive damages if the circuit court had not refused to allow
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them to present evidence of their financial status to the jury. 10 Plaintiff argues that there is no
requirement that such evidence be allowed before punitive damages can be we awarded and,
alternatively, that defendants forfeited this issue by failing to make an offer of proof regarding
what the proposed evidence would have shown.
¶ 105 Plaintiff cites Ford v. Herman, 316 Ill. App. 3d 726, 734 (2000) for the proposition that
"the absence of financial status evidence does not mandate that the punitive damages award be
overturned." In that case, however, neither party sought to introduce such evidence. Id. Ford
stands only for the proposition that, where "[f]inancial status is but one factor for the jury to
consider" (id.), the plaintiff's failure to present such evidence does not automatically result in a
punitive damages award being overturned. It does not stand for the proposition that such an
award may stand when the defendant sought to introduce such evidence and was barred from
doing so. In fact, the court admonished the defendant in that case that this is precisely what he
should have done. See id. at 734-35 ("the defendant bears the burden of putting on that evidence.
*** If [he] knew he would have financial difficulties in paying a punitive damages award, then
he should have so informed the jury."). Plaintiff also attempts to distinguish Powers, a case cited
by defendants, on the basis that the court in that case was not asked to determine whether
evidence of the defendant's financial status was admissible at trial, but only whether it was
discoverable. Powers v. Rosine, 2011 IL App (3d) 100070, ¶ 13. The court noted, however, that
the financial status of a defendant is important when considering an award of punitive damages
because "an amount sufficient to deter one individual may be trivial to another" and "the intent of
10
We decline to consider defendants' additional argument, raised for the first time in their reply brief,
that the circuit court not only erroneously barred this evidence but improperly instructed the jury. See
Sylvester v. Chicago Park District, 179 Ill. 2d 500, 507 (1997) (issues raised for the first time in a reply
brief are forfeited); Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013) (points not argued in appellant's brief are
forfeited); Ill. S. Ct. R. 341(j) (eff. Feb. 6, 2013) (reply brief "confined strictly" to responding to the
arguments presented in the appellee's brief).
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a punitive damage award is to punish the wrongdoer and deter that person, and others, from
committing similar acts in the future." Id. ¶¶ 11, 13. To accomplish these purposes, the court
concluded that "information regarding [the defendant]'s financial status would need to be
admitted." (Emphasis added.) Id. ¶ 13.
¶ 106 We review a circuit court's rulings regarding the admissibility of evidence for abuse of
discretion. Salcik v. Tassone, 236 Ill. App. 3d 548, 551 & n.1 (1992). Evidence of the individual
defendants' financial status was certainly relevant to an award of punitive damages in this case.
Relevant evidence may nevertheless be excluded "if its probative value is substantially
outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or
by considerations of undue delay, waste of time, or needless presentation of cumulative
evidence." Ill. R. Evid. 403 (eff. Jan. 1, 2011). In making its ruling on this issue, the circuit court
stated that it did not believe the particular circumstances of this case, including the amount of
compensatory damages sought by plaintiff, justified "interject[ing] an issue that could be rather
lengthy and involved," particularly where the court noted that "[a]s far as proportionality, the
Court [would] *** entertain an adjustment of that post-trial if necessary." Given the potential
undue delay and confusion that may have resulted from a lengthy digression into the financial
status of the individual defendants, we cannot conclude that the circuit court abused its discretion
in refusing to admit this otherwise relevant evidence.
¶ 107 Moreover, even if the evidence was erroneously excluded, where the individual
defendants failed to make an offer of proof on this issue, we have no basis for concluding that
the award of punitive damages is so disproportionate to their net worth that it must be vacated.
Cf. Fopay v. Noveroske, 31 Ill. App. 3d 182, 201 (1975) (holding evidence of net earnings, as
opposed to net worth, were erroneously admitted but concluding the error was harmless where
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the reviewing court could itself compare the award of punitive damages to the properly shown
net worth); see also Powers v. Rosine, 2011 IL App (3d) 100070, ¶ 14 ("evidence of the
defendant’s financial status is necessary for an appellate court to properly review a challenge to
an award of punitive damages under the Illinois common law").
¶ 108 Defendants cite Dillon v. Evanston Hospital, 199 Ill. 2d 483, 495 (2002) for their
proposition that "no offer of proof is required where it is apparent that the trial court understood
the nature and character of the evidence sought to be introduced." An offer of proof, however,
serves two distinct functions: "to disclose to the trial judge and opposing counsel the nature of
the offered evidence, enabling them to take appropriate action," and "to provide the reviewing
court with a record to determine whether exclusion of the evidence was erroneous and harmful."
People v. Thompkins, 181 Ill. 2d 1, 10 (1998). Dillon is furthermore distinguishable, in that the
excluded evidence in that case was testimony barred because it was cumulative of that provided
by another witness. 199 Ill. 2d at 495-96. Having heard the previous witness testify, the circuit
court readily understood the nature of the evidence. Here, defendants claim they "let the trial
court know what the evidence would show on this issue," but no specifics were discussed on the
record. This was insufficient. An offer of proof must show with particularity the substance of the
evidence; a conclusory summary of a witness's anticipated testimony is inadequate. Andrews,
146 Ill. 2d at 421-22. Although defendants now argue that, if given the chance, they would have
rebutted the inference that they benefited from the financial improprieties they were accused of
and would have instead demonstrated for the jury their "bleak financial condition," we cannot
simply take them at their word. With no offer of proof in the circuit court, we are unable to
assess what effect, if any, the barred testimony might have had on the jury's award of punitive
damages.
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¶ 109 Having reviewed the relevant common law criteria, we cannot say that the jury's
assessment of punitive damages in this case was excessive as a "result of passion, partiality, or
corruption." We therefore will not disturb it.
¶ 110 F. Plaintiff's Cross Appeal
¶ 111 On cross-appeal, plaintiff raises several challenges to the circuit court's damages award,
claiming the court erred when it limited his breach of contract damages to one year of severance
pay, reduced his recovery for lost wages by the amount of his actual earnings after he was
terminated, and awarded him only $1,500 of the $38,684.30 in costs he sought as a prevailing
party.
¶ 112 1. Forfeiture
¶ 113 Defendants argue that plaintiff failed to preserve these issues for appeal by not filing a
post-trial motion. In response, plaintiff argues that because the issues he raises on cross appeal
relate to the award of damages, and because defendants also dispute certain aspects of the
damages award, his claims of error should be deemed properly preserved. We decline to consider
this proposition where plaintiff cites no supporting authority and where we ourselves are aware
of none. See Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013) (noting argument must be accompanied by
citation to relevant authorities and providing that points not argued on appeal are waived).
¶ 114 Plaintiff also contends that "[b]ecause these issues were repeatedly raised before the trial
court, they should be deemed preserved for purposes of this appeal," noting that he raised at least
one of the issues in his motions in limine, at oral argument, and in an emergency motion to
reconsider the court's ruling on the motions in limine, to the point that the circuit court stated that
it had "heard enough." This argument is unavailing. We initially note that a scheduling conflict
in this case meant that a different judge presided over the trial from the one who ruled on the
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parties' motions in limine. Any indication the former judge gave that he was not inclined to
change his rulings is therefore irrelevant. Even if the same judge presided throughout, such
statements cannot excuse a party from complying with the statutory requirement. See Arient v.
Shaik, 2015 IL App (1st) 133969, ¶ 38 (holding an issue not raised in a post-trial motion was not
preserved for appeal, despite the fact that, during the trial, the circuit court had warned the
plaintiff that if he raised the issue again, it would declare a mistrial). It is well established that the
"failure to file a post-trial motion following [a] jury trial amount[s] to a failure to preserve any
matters for review." Barry Mogul & Associates, Inc. v. Terrestris Development Co., 267 Ill. App.
3d 742, 755 (1994). This is equally true for issues raised by cross-appellants. See, e.g., id. The
rule exists, in part, because "it allows the decision maker who is most familiar with the events of
the trial, the trial judge, to review his decisions without the pressure of an ongoing trial and to
grant a new trial if, on reconsideration, he concludes that his earlier decision was incorrect."
Brown v. Decatur Memorial Hospital, 83 Ill. 2d 344, 349 (1980). By requiring litigants to state
specific grounds in support of their claims of error, it also crystallizes the issues for the trial
judge and allows the reviewing court to readily ascertain whether the trial court was afforded an
adequate opportunity to reassess any allegedly erroneous rulings. Garcia v. Seneca Nursing
Home, 2011 IL App (1st) 103085, ¶ 25 (quoting Brown, 83 Ill. 2d at 349-50). Plaintiff has
advanced no convincing basis for his exclusion from the requirement in this case. Accordingly,
we find plaintiff has forfeited review of the claims of error he raises in his cross appeal.
¶ 115 Because the forfeiture rule is an admonition to the parties and not a limitation on the
court, however, we may overlook it “in the interest of developing a sound body of law [citation],
and may review any issue so long as the record contains facts sufficient for its resolution
[citation].” In re J.R., 342 Ill. App. 3d 310, 317-18 (2003). We do so here.
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¶ 116 2. Damages for Breach of Contract
¶ 117 Plaintiff initially argues the circuit court erred in limiting his breach of contract damages
to one year of severance pay. According to plaintiff, the employment agreement provided him
with a guaranteed term of four years of employment as CEO of Packer Engineering, at the
conclusion of which he would become an "at-will" employee subject to termination without
cause. Plaintiff contends that, because defendants had no right to terminate him without cause
before during the four-year term, he is entitled to what he would have earned under the
agreement for the remainder of that term, plus one year of severance pay for his termination
without cause. Defendants insist the severance clause applies during the four-year term of
employment to limit damages for breach of contract during that initial term.
¶ 118 Although "the amount of recoverable damages is a question of fact for the jury, the
measure of damages upon which the jury's factual computation is based is a question of law for
the court." Tri-G, 222 Ill. 2d at 252. Where, as here, the circuit court determined the construction
of a contract as a matter of law, our review is de novo. Wiczer v. Wojciak, 2015 IL App (1st)
123753, ¶ 33. We construe the agreement as a whole, mindful that "meaning and effect must be
given to every part[,] *** including all its terms and provisions, so no part is rendered
meaningless or surplusage unless absolutely necessary." Coles-Moultrie Electric Cooperative v.
City of Sullivan, 304 Ill. App. 3d 153, 159 (1999).
¶ 119 We are of the view that, taken together, the relevant provisions of plaintiff's employment
agreement unambiguously establish that the severance pay provision applies both during and
after the initial four-year term of employment. In Illinois, the default employment relationship is
"at-will" employment. An at-will employee is "a noncontracted employee *** who serves at the
employer's will." Zimmerman v. Buchheit of Sparta, Inc., 164 Ill. 2d 29, 32 (1994). An employer
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may discharge such an employee for any reason or for no reason at all, with or without notice. Id.
"[P]arties may alter the at-will nature of the[ir] relationship, however, by providing for a fixed
duration of employment." Krum v. Chicago National League Ball Club, Inc., 365 Ill. App. 3d
785, 788 (2006). We agree with plaintiff that the employment agreement in this case created a
fixed-term contract. Plaintiff was not an "at will" employee during the first four years of his
employment, and, contrary to defendants' reading, could therefore only be terminated for cause
during this period. In an attempt to distinguish Berutti v. Dierks Foods, Inc., 145 Ill. App. 3d 931
(1986), a case cited by plaintiff on this point, defendants point out that the word "guarantee" was
never used by the parties in this case. In Berutti, unlike here, the parties' employment agreement
contained no fixed term, but merely stated that the plaintiff would be paid a " '[g]uaranteed
salary for twelve months of $750.00 per week.' " Id. at 933. Affirming summary judgment in the
employee's favor, the appellate court held that this language did not merely state a rate of pay,
but was sufficient to establish a fixed term of employment. Id. at 936. Berutti merely stands for
the proposition that a promise of a guaranteed salary can be enough to imply a fixed term where
one is not otherwise specified. It does not hold that the word "guarantee" is required to remove
an arrangement from the realm of at-will employment where a term is clearly specified. Indeed,
"no set form of words or course of conduct is required to make [an] employment at will or for a
specific period of time." (Internal quotation marks omitted.) Stein v. Isse Koch & Co., 350 Ill.
App. 171, 175 (1953).
¶ 120 The severance pay provision provided one year of salary and benefits, plus targeted
incentive compensation, if plaintiff's employment was terminated without cause, as a result of
constructive cause, or due to a change in control of the company. Although plaintiff could only
be terminated without cause after the initial four-year term, he could still be terminated for
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constructive cause or as a result of a change in control within his first four years as CEO. There
is thus no conflict in reading the severance pay provision to apply to a termination at any time
and there is no language anywhere in the agreement limiting the provision to either the initial
four-year term (as defendants suggest) or to the period of time following that term (as plaintiff
contends on cross-appeal).
¶ 121 The circuit court concluded that "the only reasonable construction" of plaintiff's
employment agreement was that "the severance pay provision plainly applie[d] to a termination
during the four-year term of the agreement." We agree. As discussed, supra, this provision
served to limit the exposure of the corporate defendants, who were parties to the agreement and
negotiated its terms with plaintiff, in the event that they terminated plaintiff without cause. It did
not, however, limit the exposure of the individual defendants, who were not parties to the
agreement and remained liable for all damages flowing from their tortious conduct. The circuit
did not err in limiting plaintiff's breach of contract damages to severance pay but permitting the
jury to award plaintiff the other benefits he would have received if the agreement had been
performed in connection with his tortious interference claim against the individual defendants.
¶ 122 3. Evidence of Plaintiff's Post-Termination Earnings
¶ 123 Plaintiff next argues the circuit court erred when it denied his motion in limine to exclude
tax returns and other evidence of income he received after his termination from Packer
Engineering. In his motion, he argued that evidence of his post-termination earnings was not
relevant where he had a contractual right to a fixed salary for four years, plus severance and
other benefits. The circuit court disagreed, ruling that plaintiff's recovery of lost wages was
"limited to the differential between his actual earnings and the earnings he would have had
except for his employer's tortious conduct."
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¶ 124 As part of its inherent power to admit or exclude evidence, a circuit court has broad
discretion to grant or deny motions in limine. DiCosola v. Bowman, 342 Ill. App. 3d 530, 535
(2003). Unless the court's exercise of that discretion relied on an erroneous conclusion of law, we
will not disturb its rulings absent a clear abuse of discretion. Beehn v. Eppard, 321 Ill. App. 3d
677, 680-81 (2001). "An abuse of discretion will be found only where the circuit court's decision
is arbitrary, fanciful, or unreasonable or where no reasonable person would take the circuit
court's view." People v. Ursery, 364 Ill. App. 3d 680, 686 (2006).
¶ 125 Plaintiff argues that, under the collateral source rule, his post-termination earnings were
not relevant because they represented benefits realized from an independent source. Plaintiff
admits that application of the collateral source rule can result in an injured party receiving a
windfall, but argues that this result is preferred over relieving a wrongdoer of full responsibility
for its actions. In response, defendants contend the collateral source rule has no application here.
They argue evidence of post-termination earnings were relevant where plaintiff had a duty to
mitigate his damages by seeking similar employment and where his damages were properly
reduced by those sums that he earned or could have earned through such employment.
¶ 126 It is well established that damages for lost wages are "the amount normally received
without discharge less the amount earned or that reasonably could have been earned in
mitigation." Harden v. Playboy Enterprises, Inc., 261 Ill. App. 3d 443, 453 (1993). "The purpose
of damages is to put the nonbreaching party into the position he or she would have been in had
the contract been performed, but, not in a better position." Id. at 454. The collateral source rule is
typically asserted by personal injury plaintiffs whose insurance has paid for some or all of the
medical services necessitated by a defendant's tort. Arthur v. Catour, 216 Ill. 2d 72, 80 (2005).
Pursuant to that rule, "benefits received by the injured party from a source wholly independent
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of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from the
tortfeasor." (Internal quotation marks omitted.) Id. at 78.
¶ 127 The single case plaintiff cites for the proposition that the collateral source rule applies in
wrongful termination cases supports the opposite conclusion. In Perry v. Larson, 794 F.2d 279,
286 (7th Cir. 1986), a case in which a sheriff's deputy brought a civil rights action against his
employer, the Seventh Circuit refused to reduce the plaintiff's damages award by the amount of
unemployment compensation benefits he received, reasoning that the defendant should not
benefit simply because the state provides a means of helping those who are out of work. With
respect to money the plaintiff earned while unemployed, however, the court noted that "[t]he
jury could have considered such evidence," because, although they chose not to avail themselves
of it, the defendants "had the opportunity to argue the mitigation evidence to the jury and offer
an instruction regarding mitigation of earnings." Id. Plaintiff's attempt to distinguish Schwarze v.
Solo Cup Co., 112 Ill. App. 3d 632 (1983), a case cited by defendants, is furthermore
unconvincing. Although the employment agreement in that case expressly provided that the
employee would be paid damages equivalent to the difference between his prior salary and any
new salary, the court noted that the "provision [wa]s essentially an express incorporation of the
common law rule" regarding mitigation of damages. Id. at 638.
¶ 128 Accordingly, we are unconvinced that the collateral source rule, generally applied in
personal injury cases, is applicable to plaintiff's claims in a wrongful termination case. The
circuit court did not rely on an erroneous conclusion of law in deciding plaintiff's motion in
limine to exclude evidence of his post-termination earnings, and did not abuse its discretion in
denying that motion.
¶ 129 4. Recovery of Costs
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¶ 130 Plaintiff finally contends the circuit court erred in awarding him only $1,500 of the
$38,684.30 in costs he sought to recover as a prevailing party. The record contains no transcript
of any argument held on plaintiff's petition for costs, the circuit court issued a single-page
written order that does not provide its reasoning, and there is no indication that plaintiff sought
clarification of that order. We review the circuit court's judgment awarding costs for an absent
abuse of discretion. Boehm v. Ramey, 329 Ill. App. 3d 357, 366 (2002). Although it is true that,
on this record, we cannot discern precisely which of plaintiff's itemized costs the circuit court
awarded, defendants argue, and we agree, that the bulk of the costs plaintiff sought are not
recoverable.
¶ 131 Section 5-108 of the Code of Civil Procedure provides for an award of costs to a
prevailing plaintiff in a civil case. 735 ILCS 5/5-108 (West 2012). Section 5-108 does not define
"costs" or describe categories of costs available, leaving the definition for courts to determine.
Boehm, 329 Ill. App. 3d at 366. Plaintiff relies on the broad definition of "costs" set forth in
Galowich v. Beech Aircraft Corp., 92 Ill. 2d 157, 165-66 (1982). In Vincencio v. Lincoln-Way
Builders, Inc., however, our supreme court explained that "[n]either the plain and ordinary
meaning of the word, nor [the court's] description in Galowich, provide a working definition of
the 'costs' covered by section 5-108." 204 Ill. 2d 295, 302 (2003). It went on to hold that only
"court costs," i.e., "charges or fees taxed by the court, such as filing fees, jury fees, courthouse
fees, and reporter fees," are recoverable pursuant to that section. (Internal quotation marks
omitted.) Id.
¶ 132 Plaintiff argues that Illinois Supreme Court Rule 208(d) (eff. Nov. 1, 2011) additionally
permits a court to award costs associated with depositions. Recovery of such costs is limited,
however, to instances where a deposition is "necessarily used at trial," such as where "the
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deponent has died, has disappeared before trial, or is otherwise unavailable to testify." Vincencio,
204 Ill. 2d at 308. Although plaintiff states generally that he "incurred costs for depositions
necessary for trial," defendants assert, and plaintiff does not refute, that all of the deposition
costs plaintiff sought in his petition ($12,433.20 for witness deposition fees plus stenographer
appearance, transcription, and video fees) were for depositions where the witness either testified
at trial or was available to do so. Plaintiff has furthermore presented no argument for why
$24,630.50 in trial stenographer and transcription fees might be recoverable. Indeed, they are
not. Kehoe v. Wildman, Harrold, Allen & Dixon, 387 Ill. App. 3d 454, 472 (2008) (holding such
fees to be litigation expenses, not recoverable "court costs"). When these amounts are deducted,
Plaintiff's request is reduced to $1,620, an amount not far from the $1,500 that the circuit court
awarded. On this record, we cannot conclude that the circuit court abused its discretion and
decline to disturb the court's discretionary award of costs.
¶ 133 CONCLUSION
¶ 134 The judgment of the circuit court of Cook County is affirmed.
¶ 135 Affirmed.
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